Why all players quietly cheer for the Leafs . . .
. . . and Habs and Canucks and other rich franchises — let’s talk about escrow
They won’t say it out loud, of course, but NHL players do secretly cheer for the Toronto Maple Leafs, as well as the Montreal Canadiens, the Vancouver Canucks, New York Rangers, Chicago Blackhawks, Detroit Red Wings, Philadelphia Flyers and Boston Bruins. Why? Because when the biggest moneymaking teams are good, it makes a difference to every paycheque in the NHL.
“I’ve heard guys talk before that you want the big markets in (the playoffs),” said Maple Leafs centre Tyler Bozak. “If you’re not in, you want the big markets to go as far as possible. “It’s kind of funny how it works.” It’s all kind of an in-joke for the players who grumble to each other about escrow — the means by which owners claw back money right from their players’ paycheques. The owners are entitled to the money in the escrow account if the league fails to reach its revenue targets.
Only twice (2005-06, 2007-08) has the NHL reached its revenue targets, and the players are getting sore about it.
“Escrow? Don’t get me started,” says Chicago Blackhawks captain Jonathan Toews. “I don’t know if I want to open up a whole can of worms, but . . . when it comes down to escrow, you sign a contract as a player that you worked hard for, that you earned.
“You expect to be paid and to be looked after the way it is written in that contract. It’s pretty simple.”
Last year, players earned 87.04 per cent of their contracts — the lowest percentage since the 2004-05 lock- out created the notion of players and the league splitting revenues. Part of the reason the revenues were so low was because all seven Canadian hockey teams were terrible, and each missed the playoffs.
Financially, the seven Canadian teams typically carry more than their fair share of the revenue-target burden, representing between 30 and 35 per cent of league revenues. When they failed last year — and coupled with the shrinking Canadian dollar — NHL revenues declined, meaning owners dipped into the es- crow to make up those losses.
This year,15.5 per cent of all players’ paycheques are held in an escrow account until after accountants and actuaries determine how much hockey-related revenue was generated.
The league’s revenue is more than $4 billion, with players entitled to half. To move escrow one percentage point requires about $30 million to $35 million in new revenue.
The relative health of the Canadian markets — potentially led by the economic powerhouse of the Maple Leafs if they return to the playoffs — can assuage some bad feelings regarding escrow.
“It doesn’t make up the 15 per cent, but it helps,” said former Leaf Mathieu Schneider, now a special assistant to the NHL Players’ Association. “Any of the Canadian teams: Montreal, Toronto, Vancouver. They are three of the highest revenue teams in the league. When they’re not in the playoffs, it hurts.”
The players are increasingly antsy about escrow, at least in its current format.
The NHL tried to get the players to agree to the status quo — where the players make up for financial losses — by dangling NHL Olympic participation in front of them. The players balked, signalling their intent to fight when the next round of collective bargaining arrives as early as 2020.
“For players generally, (escrow is) No. 1 on their list of things that need to somehow be remedied, whether it’s through growth of the game, or some kind of fix of the system,” said Schneider. “It’s certainly tops on the list.”
The NBA has a salary cap and the escrow system as well, but its escrow is capped at 10 per cent. The way the NHL has arranged its deal, there is no cap on escrow.
“Guys feel generally that there is no end in sight,” said Schneider. “What happens if we have a market crash? Or the Canadian dollar goes down further than it is? It’s difficult when you look at your paycheque every couple of weeks, and there’s an additional 15 per cent off.”
The Maple Leafs take in about $2 million in revenue a game in the regular season but could double that in the playoffs, so their success — and that of the other big-market Canadian teams headed toward the postseason — aren’t going to erase ravages of escrow in one fell swoop. But a sustained run this year by Toronto — and in following years with the spike in ticket prices and merchandise sales — should have a positive effect on the NHL’s bottom line.
“Hopefully we can do that (playoff run) for all the other guys out there,” said Bozak, smiling.